Relative Export Prices and Firm Size in Imperfect Markets
One of the key issues of the rising field in international trade and industrial organization1 is the impact of trade on static efficiency. Attempts are made to relax the assumptions of perfect competition and non-increasing returns to scale, which are dominant in traditional trade theory. The new theories seem to imply that the substantial increase of foreign trade as part of the gross national product in most industrialized countries is beneficial because it has pro-competitive effects on internal market power. In the structure-performance models (e.g., Jacquemin, De Ghellinck, and Huveneers (1980)) the degree of foreign competition is taken to exert an influence on profit margins. This implies that static efficiency is sppurred by international trade.
KeywordsFirm Size Market Power Foreign Market Domestic Market Imperfect Competition
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